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Activity based budgeting is a technique that focuses on costs of activities or cost drivers necessary for production and sales. Such an approach facilitates continuous improvement.

Conventional capital budgeting

Conventional: Based on or in accordance with general agreement

Capital budgeting is the planning process used to determine whether an organization's long term investments such as new machinery, replacement machinery, new plants, new products, and research development projects are worth pursuing. It is budget for major capital, or investment, expenditures.

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Q: How an activity-based capital budget differs from a conventional capital budget and describe the impact of activity based costing on capital-budgeting decisions?
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